Former media baron Conrad Black’s use of the Hollinger newspaper empire’s corporate jet for a trip to Bora Bora and other travel cost $7 million a year, a government witness testified Wednesday.
Black regularly billed the company when he took the jet to visit his estate in West Palm Beach, Fla., said Fred Creasey, the former comptroller of the newspaper conglomerate.
Creasey said Black’s co-defendant John Boultbee, Hollinger’s former chief financial officer, approved billing the company for trips by Black and No. 2 man F. David Radler to Palm Springs, Calif.
“He said it was reasonable to let Mr. Black and Mr. Radler use the aircraft — they were working all the time — it was a reasonable business expense,” Creasey testified.
Black, 62, is charged along with Boultbee and two other former Hollinger executives with siphoning millions of dollars out of the company by selling off hundreds of community newspapers across the United States and Canada and pocketing payments from the purchasers.
The payments were for promises not to compete with the new owners in markets where the newspapers circulated. But federal prosecutors say the money should have gone to Hollinger shareholders and not the executives.
Black also is charged with illegally billing the shareholders for a Park Avenue apartment, a lavish birthday party for his wife at New York’s restaurant La Grenouille and the junket to Bora Bora followed by a stopover in Seattle for a performance of Richard Wagner’s Ring Cycle.
Creasey said Black’s use of the plane cost the company in the neighborhood of $7 million annually in his years as comptroller. He said that in 2001, the total price tag for flights was $7,067,034.
While the flights to Florida were readily written off as a business expense, the Bora Bora trip by Black and his wife, conservative columnist Barbara Amiel Black, made him uncomfortable, Creasey said.
“It did not fit into my allocation methodology,” Creasey said.
“I looked for guidance to Mr. Boultbee as to how these costs should be allocated” and ended up writing a memo asking Black’s advice, Creasey said.
Black returned his memo with a handwritten offer to pay half the $565,326 cost of the trip and suggesting the company pay the remainder.
Hollinger International ended up picking up half the cost and the rest was billed to Ravelston Corp., a closely held, Toronto-based company that Black used to control Hollinger and obtain management fees from it.
Creasey testified Wednesday that the payments Black and other executives received through four deals that closed in 2000, including a $3.2 billion sale to CanWest Global Communications, initially were not disclosed to the Securities and Exchange Commission.
Earlier, jurors got a taste of vintage Conrad Black rhetoric when Creasey told how the chairman of Hollinger Inc.’s audit committee, Maureen Sabia, warned that more such payments might not be approved unless he reported them more promptly.
“Ignore anything she and her superfluous committee say,” Creasey quoted Black as saying in a memo replying to the warning. He quoted Black as saying she “is about to be superseded by events.”